India Not Worried About Taper

The rupee has rebound since then as the government and the Reserve Bank of India took steps to increase India’s foreign exchange reserves and reduce its current account gap.

As emerging market assets tumble around the world, the Indian government went out of its way Thursday to note that Asia’s third largest economy is in better shape today than last year when the rupee was hurt in a similar sell off.

The Finance Ministry released a statement to reiterate that it is unsurprised and unconcerned by the U.S. Federal Reserve’s decision to reduce its easy money policy. The U.S. is cutting its bond buying program by $10 billion to $65 billion a month.

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“This decision was expected and should not in any way surprise or affect the Indian markets,” the finance ministry said in a statement.

India’s rupee lost as much as 20% against the dollar last summer to hit an all-time low of 68.80 rupees to the dollar on august 28 on concerns that the tapering of bond buying by the U.S. would make it more expensive for India to buy the dollars it needs to finance its chronic current account deficit.

The rupee has rebound since then as the government and the Reserve Bank of India took steps to increase India’s foreign exchange reserves and reduce its current account gap.

The Finance Ministry said it will take further measures if Indian markets turn volatile again.

“Both the government and the Reserve Bank of India will continue to remain vigilant and will take whatever steps are necessary to ensure that there is stability in the financial markets,” the statement said.

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